Bulgarian ETFs getting cross-listed in London
Most European cross-listings are too boring to merit comment. But some very interesting new ETFs are getting cross-listed over to London that we thought deserved some attention.
Expat Asset Management, the Sofia-based (and only Bulgarian) ETF provider is cross-listing its flagship product, the Expat Bulgaria SOFIX UCITS ETF (BGX) on the London Stock Exchange. BGX will track the SOFIX Index (we’d never heard of it before) is the only free float market-weighted index representing the most liquid companies listed on the Bulgarian Stock Exchange.
Going through the index we’d never really heard of these companies before either, perhaps showing how parochial we are... Top names in the index include Sopharma AD, Chimimport AD and Advance Terrafund REIT.
Expat also provides ETFs offering exposure to other small developing European countries. These include Macedonia, Slovenia, Serbia, Slovakia and others. These are currently available on Xetra but not on the LSE. We are unfamiliar with any other companies that provide these country exposures.
The company’s fascinating website is here.
Global sustainability from InsightShares
UBS-backed InsightShares is listing a new ESG fund that targets sustainability leaders. The InsightShares Global Sustainability Leaders ETF will track an index that draws inspiration from the UN Global Compact, a treaty about respect for human rights, labor, the environment and anti-corruption. Currently more than 12,000 companies have signed it.
To qualify in the index, companies must be publicly listed, which narrows the list to about 8,000 companies, and have $800m in market capitalisation. Companies must also meet liquidity requirements and have achieved positive earnings over the past three reporting periods.
What companies remain are sorted into sectors and regions, and then scored on how well they deal with ESG risks relative to their peers. The top 100 companies are included and adjustments are made to ensure that sector weightings are kept in line with benchmark. The index rebalances annually.
American Century lists three new ETFs
American Century Investment Management, a privately-owned Missouri-based financial services company, is listing three new ETFs that track relatively familiar terrain.
- American Century Diversified Municipal Bond ETF (TAXF)
- American Century Quality Diversified International ETF (QINT)
- American Century STOXX U.S. Quality Growth ETF (QGRO)
TAXF is actively managed and will invest mostly in investment grade municipal bonds with tax-exempt income tax but may invest in junk bonds. Debt securities of any duration are eligible, while the average duration will be based on the portfolio managers’ forecast of interest rates. TAXF will invest mostly for income but will also sometimes invest for capital growth (i.e. if the fund managers have a view that a certain security will receive a credit upgrade).
QINT will attempt to identify international large and mid caps with attractive growth, valuation, and quality fundamentals. The index starts by taking stocks around the world, excluding the US and then screens them for higher profitability, return on assets, return on equity, and gross margins.
Companies are then screened for growth and value, where the growth score is based on sales, earnings, operating income, profitability and cash flows. The value score is based on value, earnings yield, dividend yield, and cash flow metrics. The index provider then weights each security based on a combined growth and value score. The index will mostly consist of 400–600 securities, the prospectus says and will rebalance monthly.
QGRO will do something similar to QUINT and look for attractive growth and quality fundamentals, only from the US. QGRO starts by taking the STOXX USA 900 Index, which consists of the 900 largest publicly traded US companies. It then looks for those with higher growth and quality characteristics where quality is – again – defined by higher profits, ROA, ROE and margins. The index then weights each security according to its growth score, which is based (again) on sales, earnings, operating income, profitability and cash flows. The index will typically consists of 200–300 securities and will also rebalance monthly.